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All about Public Provident Fund (PPF) Account

A full form of PPF, the Public Provident Fund Account is a popular investment scheme among investors due to its numerous investor-friendly features and associated benefits. This is a popular long-term investment program for individuals looking to generate high but stable returns. Proper custody of the principal balance is the main goal of those opening Public Provident Fund accounts.

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What is Public Provident Fund (PPF) Account?

With a PPF (Public Provident Fund), you can save a portion of your income each year to build your retirement plan while earning competitive interest on your savings and receiving tax benefits. PPF was created to encourage people to save, especially those not affiliated with an Employee Provident Fund Organization (EPFO). Public Provident Fund offers a current interest rate of 7.1% compounded annually. In addition, the maximum contribution to the PPF scheme is Rs 1,50,000/- and the interest earned on the deposit amount and unpaid amount under section 80C of IT also allows for triple tax benefits under the PPF scheme.

Public Provident Fund (PPF) Account Eligibility

  • Any Indian citizen can invest in Public Provident Fund.
  • A Citizen can only have one PPF account for him/her unless the second account is in the minor’s name.
  • NRIs and HUFs are not eligible to open Public Provident Fund accounts. However, if you have an existing PPF account in that name, that account will remain active until the closing date.

Public Provident Fund (PPF) Account Interest Rate

  • Interest rates on Public Provident Fund Accounts are regulated by the Government of India on a quarterly basis.
  • The current interest rate for Public Provident Fund Accounts is 7.1% per annum.
  • The interest rate is calculated monthly on the lower limit of the Public Provident Fund Account balance from the 5th to the last day of each month.
  • It is recommended to contribute by the 5th of each month to your Public Provident Fund account.

Tax Benefit of Public Provident Fund (PPF)

A PPF is an investment vehicle that falls into the Exempt-Exempt-Exempt (EEE) category. This means that all payments to PPF are deductible under Section 80C of the Income Tax Act. However, please note that the maximum PPF contribution cannot exceed INR 1.5 lakh in any financial year.

In addition, the unpaid amount and interest at the time of payment are tax-exempt. It is important to note that PPF accounts cannot be closed prior to expiration. However, PPF accounts can be transferred from one destination to another. Please note, however, that PPF accounts cannot be closed early. A nominee may request account closure only in the event of the death of the account holder.

Public Provident Fund (PPF) Account Opening Online

Just follow the steps to open your Public Provident Fund Account online:

Step-1: First of all sign into your bank account in which you want to open your Public Provident Fund Account.

Step-2: Select the option “Open a PPF Account”.

Step3: Click on “Self Account” option if the account is for self else select “Minor Account” option in case of a minor.

Step4: Fill the relevant details.

Step5: Mention the amount which you want to deposit every financial year.

Step6: Submit the application. Fill the OTP sent to the registered mobile number.

Step7: After verifying the OTP, you will see your Public Provident Fund Account number on the screen. You will get all the details of your Public Provident Fund Account on your registered email ID.

Public Provident Fund (PPF) Amount Withdrawal

As a general rule, the balance of the PPF account can only be fully withdrawn when it expires, i.e. after 15 years. After 15 years, the account holder’s entire balance and accrued interest on the PPF account can be freely withdrawn and the account closed.

However, if the account holder needs the funds and wants to withdraw the funds before the 15 years are up, the system will allow partial withdrawals from 7th year.

Procedure for Public Provident Fund (PPF) amount withdrawal:

  • You will receive a PPF withdrawal request form from the bank/post office where you opened your PPF account (Form 3, Form C).
  • Fill out the relevant information on the application form.
  • Submit your application to the bank or post office where you have your PPF account.

Public Provident Fund (PPF) Account Closing

PPF accounts can be closed 15 years after the account opening date. Here are the steps to close your PPF account:

  • Please complete Form C with relevant information and attach your PPF passbook.
  • Submit it to the post office or bank branch where you have your account.
  • Your application will be processed and your account will be closed. Receive payments in a savings account linked to your PPF account

Transferring of Public Provident Fund (PPF) Account

You can transfer your PPF account to another bank/post office branch, switch from bank to post office, or switch from post office to bank. Here are the steps:

  • Visit the bank or post office where you have a PPF account.
  • Request a PPF Account Transfer Application Form and fill in the relevant details.
  • The branch representative will process the application and forward it to the new branch along with a certified copy of the account, nomination form, account opening application, sample signatures, and a check/DD for the outstanding balance of the PPF account.
  • Once the new branch receives the application form and supplementary documents, they will need to submit the new PPF account opening application form and the old PPF account passbook. You can change the nomination at this point.
  • Once this application is processed, your PPF account will be successfully migrated to the new branch.

Limitation of Public Provident Fund (PPF) Account

A PPF account has many benefits. However, there are still some limitations listed below.

  • PPF accounts have a 15-year lockup period, which is impractical in the event of an emergency or if someone has financial obligations to fulfill.
  • There are certain rules and regulations that must be followed when funds are withdrawn before the due date.
  • PPF does not offer competitive interest rates
  • Such accounts cannot be jointly held
  • Individuals can only donate Rs. 1.5 lakh to his/her PPF account. Amounts over this amount will be automatically rejected
  • PPF accounts can only be opened by Indian citizens. NRI cannot open such accounts
  • A PPF account cannot be closed within five years of opening. A PPF account may only be closed if the account holder, spouse, or children have a life-threatening illness.

Conclusion on Public Provident Fund (PPF)

A PPF account is a great investment option as it allows individuals to build a bonus corpus. Before donating to PPF, we encourage you to learn everything you need to know about PPF, including its benefits, limits, deposit size, and more.

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FAQs on Public Provident Fund (PPF)

What is Public Provident Fund Interest Rate in Post Office?

7.1 % P.A (compounded yearly).

Is Public Provident Fund (PPF) good in post office?

The interest rates associated with post office PPF accounts are relatively higher than some other savings plans and bank fixed deposits. The interest rate till Q4 2022-23 is 7.1%. Being a government-backed savings scheme, investors can enjoy a safe investment over the long term.

Is Public Provident Fund (PPF) better than FD?

Tax-saving FDs have a five-year vesting period, which is much shorter than PPFs. However, FD comes with a certain amount of risk, and the interest you earn is also taxable. So, if you’re comfortable with a 15-year commitment, all things considered, PPF could be a good option.

What is Public Provident Fund (PPF) age limit?

There is no age limit for opening a PPF account. Both adults and minors can have a Public Provident Fund Account. However, for minors under the age of 18, a parent or guardian must maintain an account until the age of 18.